A Statement On Ukraine from Kevin Maggiacomo, SVN President and CEO

Loading...

CRE Brokerage Firms: Should You Stay Independent?

Independent vs. National Commercial Real Estate Firms

To be, or not to be, that is the question…” goes the famous opening line of an act from the Shakespeare play, Hamlet.

That very same question is what a lot of CRE Principals ask themselves every day. “To Be Independent or not to Be Independent… and Be with a National Firm.”

The decision is not an easy one, especially for an Independent who may feel as though his/her niche in the marketplace would be disruptive to current business if they were to align themselves with a national platform.

If you’re someone who wants to buy and sell for their own gain and possible syndication, well, a national platform may not be the choice for you. However, if you are an independent CRE brokerage or property management firm that wants to step up their game and compete with the national players, then looking at a national platform definitely behooves you to take a little time to gather information so you can make a knowledgeable decision.

5 Factors to Consider When It Comes to Independent vs. National Firms

Let’s first consider the information that would allow you and your firm to make that informed decision:

  1. Technology: I know, I know. It’s always changing and it’s one of the biggest expenses an independent firm incurs. If not in hardware and software, in people or outside services. A few questions to ask are: “Does this national platform have the technology I will need today and position me for future growth without a seismic shift in how I do business or in training? Is it cloud-based or on premise technology? Will the firm help train, accelerate my transition to its platform? Is what I currently have working?”
  2. Financial: As Bill Clinton once said, “It’s about the economy, stupid.” Well, in our business some would argue it’s “Show me the money!” A few things to consider: “Do I see how this move to a national firm would enhance my bottom line? Will it allow me to reduce marketing expenses or greatly enhance my marketing efforts? Is my market demanding or is it asking for more of a national presence to be competitive? How can it help me with existing and new relationships? Can it help me do more deals? Can it help me recruit and retain top talent? And last but not least, what are the commission splits and what are the fees?”
  3. Personal: What will ultimately suit my business, my people, my family and my clients? What do the next 3-5 years look like in my business?
  4. Intangibles: What are the Unknown Unknowns? I like to call them the “unk unks.” To get this perspective, it is very important to talk to the current principals of the national platform you are considering and get a mix of their experience. Do your due diligence and spend a little time with principals who have been affiliated from 1 year to 5 years with the national platform you are considering. This is imperative before making your final decision. This will allow you to see what the “real deal’ is without all the marketing hype. “Looking under the hood to make sure there is an engine there” is necessary before your final decision.
  5. Why not you, why not now? – Only you have that answer…

Brand Identity and SVN® Commercial Real Estate Advisors

Last week I was asked by a prospective SVN principal: “I am concerned my brand identity will be compromised and I will lose the local flair with a national platform. What should I do about my brand?” My response: “I don’t know about that, we can talk about it; however what I do know is what I hear from owners of independent firms who were asking the same questions before they joined forces with SVN…”

SVNHere’s how SVN can address the Independent vs. National Firm concern, from the words of various members of the SVN community:

“With a national platform, we now harness the power of one of the industry’s 6th most-recognized names with the expanded reach of an international network of over 1,300 Advisors in over 500 markets. The brand has definitely given my firm the opportunity to grow my business and client base. I now sit at the table to compete with the other nationals in my market.”

“We now have unlimited access to industry leading-edge commercial real estate tools and technology that helps maximize our clients’ returns and saves us time and money.”

“We now have expanded visibility and marketing to reach the widest possible investor audience and access to a broader array of asset classes and so much more as part of a global network. It is the SVN Advisors that make up the difference…this is a global network where each person is committed to putting their clients’ interests first.”

If you are looking to “step up your game” – now is the time to gain information to help you make a knowledgeable decision so you are ready for growth in 2016. The best of luck to you with your “to be or not to be” decision!

Read more about Karen Hurd here.

[bctt tweet=”If you’re looking to step up your game – now is the time to gain information to help you make a knowledgeable decision so you are ready for growth in 2016! #CRE”]

Broker Boot Camp | 4 Traits of a CRE Brokerage Superstar

Do You Have What It Takes to Be a Brokerage Superstar?

Having attended the Sperry Van Ness® Broker Boot Camp in Chicago three weeks ago, I now know a little bit about what it takes to “make it” in the commercial real estate brokerage business. Full disclosure: I’m a marketing intern, so my experience as a broker is non-existent. However, since I had the opportunity to sit in on the first day of the Boot Camp, led by industry veteran John McDermott, I now have a pretty good idea of some of the qualities that differentiate a brokerage “superstar” from the rest.

To be clear, even being just a “good” broker isn’t as easy as you may think. (See my first Boot Camp blog post for some elaboration). To be a “superstar” in any field you need to set measurable goals, as my second Boot Camp blog post discussed. But for commercial real estate brokerage in particular, you must possess 4 specific traits to become a top performer.

The Intern’s Take on the 4 Traits of a Brokerage Superstar

1. You must be tenacious. As a broker, there are few times when it’s acceptable to simply take “no” for an answer. Brokerage superstars are relentless — when appropriate, they prod further with clients who seem to be shutting them down. Instead of calling it a day, a brokerage superstar asks questions when she is slammed with a “no.” For example, rather than ending the conversation when a potential client says he has no interest in giving you an exclusive listing, ask what his reservations are and listen to his response.

2. You must be a self-starter. As I already mentioned, brokerage isn’t easy. Perhaps the hardest part of commercial real estate brokerage is starting out as a brand-new broker. A budding brokerage superstar will jump on the opportunity as soon as she is hired by a brokerage firm by immediately starting to build her database, accumulate contacts, and practice key skills. This brokerage superstar doesn’t wait to receive help or direction. Instead, she takes initiative by doing everything in her power to succeed from the Day 1.

3. You must be self-motivated. From what I understand, brokerage can be a lonely business at times, because it is ultimately up to you as a broker to close your deals and earn paychecks. While it seems scary (in my opinion) to be relying only on commission for your income, a brokerage superstar sees this as an advantage. A brokerage superstar is fearless and confident in her own abilities to bring home the bacon, and doesn’t need outside motivation to stay fired up.

4. You must be able to make connections with the right people. This doesn’t mean you can just say “oh, I’m a social butterfly!” and spend your week chatting with your friends. A brokerage superstar doesn’t just work the room — she works the room with a purpose. She goes out of her way to introduce herself to industry leaders and research the local movers and shakers. Following any meeting or casual encounter, a brokerage superstar takes notes and catalogues this experience for future reference. As a broker, your business is built on knowing the right people, so you must be professional, likeable, and strategic in order to make worthwhile connections.

If you think you have what it takes to be a brokerage superstar, visit our Careers page by clicking here

To learn more about the SVN Broker Boot Camp, click here

broker-boot-camp-homenew

 

The Benefits of Being an Early Riser in Commercial Real Estate

Early To Rise….

One of the great things about being an entrepreneur is that you get to choose when you come to work, what you do and when you leave. Especially in Silicon Valley, tales abound of people working wacky hours, pulling all-nighters and doing just about anything other than a nine-to-five day.

When I visit offices, I’m frequently the first one there. It’s not uncommon for me to hand the newspaper to the staff member as he or she walks in to unlock the door. Here’s the funny thing: I’m not a morning person. Really. When I was a college student, I had a knack for still being asleep for my 4 pm classes.

So, what happened? What happened was that I became a broker and I learned that, while I was free to choose my own hours, my clients and prospects were going to dictate the choices that I made.

One of the great things about commercial real estate is that our jobs generally track the business day. Clients are either business people or individual investors that have earned the luxury of not having to think about their buildings outside of typical business hours. Furthermore, many of them are more likely to answer their phones and have time to talk in the morning.

You’d think that this means that if your clients are ready to rock and roll at 8:30 am, you should be too.

But that’s too late.

Think about it. When you get into the office, you need to take off your overcoat (assuming you live where they have winter), boot up your computer, get coffee, touch base with co-workers, check your email and do all of those other things that are a natural part of starting your day. Usually, it’s at least a half-hour until you’re able to do anything productive.

And, in that half-hour, your competitors – many of whom ARE up and running early – have already gotten ahead of you.

The solution? Ben Franklin nailed it… “Early to bed and early to rise makes a [person] healthy, wealthy and wise.”

Manhattan: Early to Rise

To learn how you can get involved in the commercial real estate industry, visit our Careers page here.

How to Effectively Market Properties

The Two Things You Must Do to Effectively Market Properties

2015 is well underway. You clients should be back in the swing of things, which means that you are doing more proposals and taking more exclusive listings. Great!

Now, it’s time to get those listings sold, and to turn them into paychecks. In order to get them closed, you need to market. Here’s the two things you have to do in order to effectively market your properties:

  1. Call every buyer you should know.
  2. Work the entire brokerage community to get them to do #1.

Let’s get down to the details because it’s important to completely do both steps if you want to increase your closing rate.

Call Every Buyer You Should Know

There’s an extra word in this heading – should – but it’s there for a good reason. Right now, most Brokers (and possibly a few SVN® Advisors), get a listing and immediately call their top buyers. Some even call a few more. What most brokers don’t do is to call every possible buyer that they can reasonably find.

I’m not talking about finding every possible buyer in the country – we’ll cover that in the next paragraph. I’m talking about calling the person two blocks down the street that no one else calls, but that buys a building once every 25 years. If you cover them, you’ll get access to qualified buyers that no one else will touch. And, really, isn’t that what your client is paying you to do?

Work the Entire Brokerage Community

In addition to doing your best to find buyers that no one else can find, it’s also your job to make sure that every Broker in the country finds the buyers that you can’t find. That way, your best pool competes with everyone else’s likely pools to find the best possible offer for your seller.

Syndication through our online marketing tools and through electronic mail blasts are also a part of the process, but they’re only a small part.

If you want to know what you can do to energize both the SVN community and the rest of the industry, take a look at the attached infographic. It’s a how-to of everything you need to do to get your deals sold. In fact, don’t just look at it. Print it out, tape it to your wall, and keep it handy to remind you how to get ALL of your listings sold.

To learn more about the Sperry Van Ness® marketing systems and tools, click here.

SVN Value Prop

Broker Boot Camp | Top 3 Rookie Mistakes about CRE Brokerage

Intern Insights: Rookie Mistakes about CRE Brokerage

As a marketing intern at Sperry Van Ness International Corporation I had the opportunity to attend last week’s Broker Boot Camp in Chicago. Now, let me be honest — I knew next to nothing about commercial real estate brokerage going into this training. Since I’m just about as “rookie” as it gets, speaker John McDermott’s “Top 10 Rookie Misconceptions” about the brokerage business provided me with a much-needed wakeup call about the industry.

I’ll admit it — I was guilty of falling for each of the CRE brokerage myths John mentioned, so I’m going to share my 3 favorites with you. It’s time to dispel some rumors…

The Intern’s Take on the Top 3 Rookie Mistakes

1. “It looks easy.” Well, it’s not. If CRE brokerage were easy, everyone would be doing it. Good brokers can often work up to 80 hours a week building their businesses. Since brokers rely on the commission-only “results economy,” the pressure is always on and the work is never done. You can always be making more cold calls, setting up more meetings, adding more information to your database… the list goes on.

2. “I can do it online.” Perhaps you can, but you won’t be making any money. It’s impossible to “do” brokerage well if you’re sitting at your computer, because the majority of the job involves going out and meeting prospects and surveying properties in person. To all my fellow millennials out there: nothing replaces face-to-face interactions, especially in the brokerage business. Sorry, but no one is going to tweet you your paycheck.

3. “I don’t need to cold call.” Oh, yes you do. Although cold calling is intimidating, especially for avid texters like me and my generation, it’s proven to be the single most effective way of reaching a prospective buyer or seller. Look at it this way: you only need to cold call each contact once. After that first time, the person already knows you, so that awkwardness of cold calling subsides. By the way, as a broker you should aim to make 250-300 cold calls a week. So hop on that phone and get calling.

Clearly, you don’t have to know much about commercial real estate brokerage to get something out of the Sperry Van Ness® Broker Boot Camp. Anyone can learn something useful, especially complete rookies like me.

To see how you can break into the brokerage business, visit our Careers page here

To find out more about the SVN Broker Boot Camp, click here

broker-boot-camp-homenew

Choosing a Commercial Real Estate Advisor: What to Look for Beyond Experience

When you start looking for a commercial real estate advisor, everyone will tell you to work with an extremely experienced person. Many of the names that you get as referrals will be some of your community’s leading brokers. They are extremely skilled and extremely busy.

The Truth About The “Best” Commercial Real Estate Advisors

While it may seem like commercial real estate advisors are everywhere, the fact is that when you get to the top echelon of advisors, there are very few of them and they are in a great deal of demand. Because of this, many of them are very selective with how they spend their time. Their time management skills are one of the reasons that they are so successful.

If you have a very large transaction, they will give it a great deal of attention and, in most cases, do an excellent job for you. However, if your transaction is small they will probably hand it off to a junior member of their team. When you gauge the size of what you are offering them, bear in mind that what you think is a large transaction is likely a small transaction for them.

Another Option

Work with an established firm like your local Sperry Van Ness® office, and if you can’t engage a senior commercial real estate broker, find a junior Choosing a Commercial Real Estate Advisoradvisor who may lack in years in the business, but does not lack in tools, resources and initiative. Note that in commercial real estate, the term “junior” doesn’t necessarily refer to the age of the broker or advisor, but more likely the years in the industry. Many of our own top SVN advisors already had successful careers in completely different industries. Why work with a less experienced advisor? First of all, most established firms are relatively selective about who they recruit, so the odds are that you’ll get someone pretty good. Second of all, that advisor should be desperate to do a good job so that they can build their resume. They will give your deal much more attention than a more experienced advisor will. (We note this also works when selecting attorneys!)

At this point, you’re probably asking “What if they’re incompetent?” Here’s the beautiful thing about young advisors at good firms: they aren’t left alone. When you work with them, they will typically have a senior advisor or an experienced manager watching everything you do. This gives you the benefit of working with a top-of-the-line senior advisor while also giving you a very high level of personal service.

Working hard is what I did for my clients when I was a young advisor, and providing expert oversight is what I did for my advisors’ clients when I was a senior advisor and broker/manager. Now you can take advantage of this trick!

What types of commercial real estate advisors do you like to work with? Please tell us below!

The Sperry Van Ness® team is committed to always putting the client first. Visit our advisor directory to find your nearest Sperry Van Ness Commercial Real Estate Advisor®.

 

DTZ/CW merger highlights the need for the SVN Difference

The Cushman & Wakefield/DTZ merger has dominated international commercial real estate headlines since its announcement on May 11th.  During that time, debates around the water cooler have centered on its impact and relevance to competitive firms and individual practitioners.  My staff and I have understandably been asked questions like, “What does this mean?” and “Does this matter to us?”

While the dust is far from settling on this massive merger, and while there exists a multitude of differing opinions on the topic, in the post that follows, I’ll clarify my position on the deal and share what I think it means for the SVN brand and its Advisors.

First, this consolidation is following the “Rule of 3” – over the past several years, the world economy (particularly in the developed, free market economies of Europe and North America), has been characterized by a unique economic phenomena of mergers & acquisitions at unprecedented levels.  As a result, the landscape of just about every major industry has changed in a significant way, moving inexorably toward a block of three companies that enjoy a large market presence, while still leaving a great deal of opportunity for smaller, more nimble and more client focused organizations to continue profiting in the market.  This is now in play in the business of servicing commercial real estate and comes as no surprise to many.

Second, it matters.  It matters because while the CRE brokerage industry remains remarkably fragmented, there are now fewer, bigger players.  This can prove to be tremendously advantageous to those outside of this circle, but will also send a wake-up call to many:

  • The Big 3 are increasing their revenue & profitability through market share growth and by providing a generalized “one stop shop” offering.  The growth models of the Big 3 are rooted in geographic-based market share growth and are backed by private equity or public equity giants. This can make for a disadvantage when compared to smaller firms in their ability to innovate. Much like trying to turn an aircraft carrier, these mega firms are not as nimble and swift as their smaller competitors.
  • The multi-layered firms who comprise the Big 3 will stand in sharp contrast to the more entrepreneurial firms outside of the ring.  As an SVN Managing Director said to me “Remember the commercial brokerage business when YOU determined how much you could earn; not a corporation, public entity or the stockholders?”  “That’s SVN!”  I agree – and while SVN is certainly not the only beneficiary of this dynamic, our point of differentiation just got more distinct.
  • As many have already opined, there will be considerable fallout.  Given the above, meshing the two firm’s corporate cultures is a formidable challenge for the executives involved and a strong recruiting opportunity for competitors.  You will see people moving around and significant attrition within the industry.  This is proving to be the case at SVN with our Managing Directors reporting a flurry of meeting requests from the players involved.
  • The day of the generalist is over. These larger firms are better positioned to provide more highly specialized services in every market they serve.  Regional firm and independent generalists best take heed of their better-resourced, specialized competitors.  Now is the time to focus.
  • The industry just became even more opaque. Collaborating and cooperating on investment sales and leasing transactions has not exactly been a hallmark of the big nationals.  Look for their percentage of “double-ended” deals to increase in the year ahead.

This merger matters to companies and brokerages and at both the local and national levels. Here at home, it makes the SVN Difference more stark — and even more important.  And while the opportunities stemming from the above are significant to us, what’s even more significant is that our clients need the SVN Difference more than ever.

I’ll close by sharing excerpts from an email I sent to the SVN corporate team late last week:

Our industry just went from X firms that don’t collaborate with each other to do the best for their clients to X minus one.  If you’re a seller looking to get the best price — or a tenant looking to be shown everyone’s inventory to find the right site — you won’t get better service than at SVN.

There is still only one firm that practices compensated cooperation – 50% of the fee, 100% of the time.  Only one firm that opens up all of their listings on their website and on an internationally known Monday National Sales Call — SVN. They might have gotten bigger. But, when it comes to representing our clients’ interests, we’re still better.

You can experience an alternate SVN Difference. With the mergers and the movements towards more corporate firms answering to stock markets and large equity investors, entrepreneurs are finding it harder and harder to control their own destinies in Commercial Real Estate. Here at SVN, remember that as an Advisor, you can rise as far as your talent and determination can take you with no one to stop you.

I congratulate DTZ and Cushman on their merger. But I’m even happier for our clients and for all of us.

How to Choose a Commercial Real Estate Broker

Five Mistakes Great Commercial Real Estate Brokers Don’t MakeLooking for a CRE broker who will give you both the time and positive experience that you need? Start your search by narrowing your options to established national firms. Once you’ve selected a reputable firm, don’t shy away from choosing a junior commercial real estate agent with slightly less experience and knowhow.

This may sound counterintuitive, but choosing a junior broker could be the best decision for you. For one, most established firms are selective in who they recruit, so you have pretty strong odds of finding a good broker, regardless of experience level. Secondly, the junior broker that you work with will be driven to make a good impression so that they can build their resume. Both of these factors will contribute to a broker who will give your transaction much more attention than a more experienced agent would.

At this point, you may be asking, “Well, what if they’re incompetent?” Even if you get a bad draw and end up with a mediocre junior broker, there is still a silver lining: they aren’t working alone. At any good firm, these junior brokers will have a senior agent or a more experienced manager overseeing their work. This means that you get the benefit of working with an experienced senior agent, while also getting a high level of personalized service.

I worked hard for my clients as a young agent, and as I grew into a senior agent and manager, I provided expert advice to my junior brokers and their clients. These clients greatly benefited from the time my junior brokers were able to dedicate to them, as well as the insight and knowledge of our senior staff. Now you can take advantage of this approach!

Ready to choose a broker?

We have the best Advisors in the business offering a number of CRE services. Explore our extensive list of services here.

Four Essential Qualities of a Highly Successful Commercial Real Estate Advisor

Four Essential Qualities of a Highly Successful Commercial Real Estate Advisor

There’s a lot more to being a successful commercial real estate Advisor than just having a few good suits and spending a lot of time with a cell phone glued to your ear. While it starts with thinking of yourself as an Advisor instead of just a broker that gets a deal done and moves onto the next one, after closing thousands of transactions, we’ve identified four must-have qualities that set the best Advisors apart.

An Allergy to No
To a large extent, commercial real estate Advisors make their living by being told “no.” It can take hundreds or thousands of unsuccessful cold calls to get to a single paycheck. For most people, “no” is an ending. Successful Advisors, on the other hand, take a “no” as a reason to go ask another question – or ask another prospect. And they keep going until they hear “yes.”

An Add-Value Attitude
We deal with highly sophisticated clients. Traditional sales tricks won’t work on them, while transactions are rare enough that you also can’t simply show up and hope that business will fall in your pocket. With this in mind, exemplary Advisors know that the key to building relationships that turn into transactions is to continually add value to prospects. Great Advisors earn relationships and loyalty by continually helping their clients. Whether they’re sharing a great piece of information to open up a prospecting call, sharing important market information or helping a client to better manage their operating expenses, they put in the work in the near term to earn the fees in the long term.

An Ability to Find Wins
Commercial real estate negotiations are some of the most complex in the business world. Good Advisors keep their client’s interests at heart. The best Advisors also understand what the other side in the negotiation needs. That way, they can find issues that will allow that party to win while still giving their client what she needs to successfully consummate the transaction.

An Absolute Sense of Integrity
Here’s a shocker. You don’t need integrity to get into commercial real estate. You don’t even need it to make money in the field. Where you need it is if you want to stay in the industry.
Above and beyond simply being the right thing to do, Integrity serves two important business purposes. The first is that it keeps you out of court. In a business where everyone can afford legal representation, it makes no sense to play fast and loose. The second is that real integrity is the most powerful brand-building tool you have. As clients see proof of your ethics over a period of years, you earn their loyalty and their referral business. If they learn that you lack it, on the other hand, your brand becomes irreparably tarnished.

Do you think we missed anything? Let us know what you think makes a great commercial real estate Advisor below by leaving a comment!


The story behind the Sperry Van Ness Monday Morning Call

One of the hallmarks of the Sperry Van Ness® (SVN) brand is our Monday Morning Sales Call. While almost all commercial real estate teams have a weekly sales meeting of some sort, the SVN call is not only national in scope, but it’s open to the entire brokerage community.  Why do we do this? Because we believe in basic economic fundamentals:

The greater the exposure, the bigger demand; the bigger the demand, the higher the sale price of an asset.  It’s economics 101.

To find out more, view our SVN Difference video.

At SVN we believe that achieving the highest and best price is always in our clients’ best interests. We practice compensated cooperation where we pay equitable co-brokerage fees on all properties to not only our own Advisors, but to any and all outside brokers.  This is where the Monday Morning Sales Call comes in.

Sperry Van Ness National Call
SVN Parke Group watches the Sperry Van Ness national call as an office in their conference room.

With co-brokerage fees motivating the marketplace, compensated cooperation guarantees that more buyers view our clients’ properties, pumping up demand, and ultimately the purchase price.

When an SVN advisor receives a new listing, it’s immediately entered into our innovative cloud-based system, creating instantaneous marketing materials and websites as well as syndication links to multiple listing services.

Qualified properties are then featured on our weekly Monday National Sales call, which is attended by our SVN advisors and other guests who are potential partners for a deal. Following the call, SVN publicizes those properties across the Internet to thousands of more potential purchasers.  The result? Here’s what our advisors have to say:

“I’ve done 4 or 5 deals … with other SVN Advisors and most of them came from the Monday morning call.”

“Sold two [NNN Investment] properties in 2012 [due to Monday morning call].”

“I’ve closed many transactions as Buyer’s broker or Seller’s broker due to the Monday Morning Call.”

“Just this week, I sent a property to my buyer, and that buyer is looking hard at it.”

By exposing listings to not only SVN advisors across the country, but also members of the outside brokerage community our advisors have more opportunities to find the right partner to close more deals.   You may think that Advisors are giving up some by splitting the commission 50/50, but they gain a lot more when they close more deals, more quickly and at a higher price.

This dedication to transparency and collaboration is something we work into every facet of SVN services from investment sales to tenant representation, from property and asset management to corporate, leasing and auction services.

To register for our Monday Morning Sales Call click here.

To find out more about franchise opportunities click here.

Sperry Van Ness is Hot on LinkedIn

One of the core values of the Sperry Van Ness® brand is that our clients get the most value when we create the most demand. It’s basic market fundamentals and collaboration at its best. This is why we open up our weekly National #CRE Sales Call to the entire brokerage and investment community and we encourage our Advisors and guests to share this information by email and social media.

Apparently, our Advisors did such a great job this week, that we received the following note from SlideShare (where we post new listings each week)!

Sperry Van Ness featured on Slideshare and LinkedIn

While our “Hot on LinkedIn” fame was short-lived, we’re hoping to make it up on the SlideShare leaderboard again!

Want to learn more about the Sperry Van Ness Difference when it comes to commercial real estate? Sign up for a call and join us on any Monday.

 

*All Sperry Van Ness® offices are independently owned and operated.

 

Q2 2013 Office Market Update by John McDermott

For the office market, the next few years should see a significant shift back to the private client marketplace and away from distressed commercial real estate.

In my 40 years of real estate and finance experience, I have identified several leading indicators that serve to predict changes in the market. These are:

  • Compression of cap rates on single tenant net leased investments;
  • The insatiable acquisition of “trophy projects” in all product verticals;
  • An apartment market on fire with the fuel of cheap long-term money and many sources for it;
  • Resurgence of demand for land, lots and subdivisions from the largest public home builders all the way down to some of the smaller in-fill local and regional players, also fueled by low interest rates.

It’s clear that the office market will benefit from these real estate and economic indicators. However, the office market does face some challenges, including a significant variance in the numbers being published on office vacancy and activity, and the varying pricing tiers based on quality and location. These challenges may spell an opportunity for the astute investor and commercial real estate advisor to provide added value.

Advisors should be careful with the sources they quote. For example, REIS reports the National Office Vacancy at 17.1% and .50 basis points below the recession high while CoStar reports National Office Vacancy at 11.9%, which would be 5.70% better than the recession high.

Following are some current statistics:

Vacancy levels for different classes of buildings:

  • Class- A projects are at 13.3%
  • Class-B projects are at 12.4%
  • Class-C projects are at 8.8%

(Obviously the discounts and concessions in the better buildings are going away and rents are firming. Tenants still seek affordability, especially until their business and the economy improve)

  • U.S. CBD vacancy is 10.9%
  • U.S. Suburban vacancy is 12.2%
  • There is still a lot of reported Class A sub-lease space at 27M s.f. or 58% of all sublease space. Still, a significant amount of excess and under-utilized space is not formally on the market.
  • Suburban markets make up 33M s.f. of the sublease inventory or 71% of the total.

Lastly, a significant number of office property owners want to get off the vertical, based not only on the property’s age, but their own age and where they are in their personal investment cycle (they may be older, want more freedom, want to lower management issues, tired of tenant issues and demands, etc.). This situation creates a new frontier of adaptive re-use, space design and modification for today’s virtual or hoteling tenant and their employees along with a significant shift back into the vibrant American CBDs.

In my opinion, the product that represents the greatest opportunity is Class A suburban office, as long as it is properly priced.

Today, the most important part of advising clients is being aware of your local competitive landscape. Additionally, you must know what the new tenancy needs, wants and demands plus  how the growing focus in space design on more “we” space instead of the “me” space of old (like law firms at 350 s.f. per person on average) will affect your client’s specific property.

As of Q2, I think the future is bright and the office market will continue to be at the core of commercial real estate.

 

Prepared by:

John McDermott Sperry Van Ness Industrial Practice Chair
John McDermott, Office Product Council Chair

John McDermott

Council Chair of Office Properties

Sperry Van Ness Chicago Commercial

 

 

*All Sperry Van Ness® offices are independently owned and operated.

 

 

 

 

 

Sperry Van Ness ranks high on annual #CRE Lipsey Survey

Sperry Van Ness International Corporation is proud to announce that it is once again one of the most recognizable names in the commercial real estate industry, according to the annual Lipsey Survey.  The 2013 Top 25 Brands survey ranks Sperry Van Ness® 11th overall – and 10th among CRE brokerages.

This is the 12th year the Lipsey Company has conducted its survey of CRE brands. This year, about 100,000 votes were cast worldwide. Mike Lipsey, founder of the Lipsey Company, attributes the enthusiasm for the survey as a sign of continued recovery for the industry.

Brokers, developers, investors, mortgage bankers, property managers and clients participated in the annual event. The results are a combination of ballots, focus groups and individual surveys conducted with industry leaders, according to the Lipsey Company.

Click here for the full survey.

 

*All Sperry Van Ness® offices are independently owned and operated.

The Sperry Van Ness Difference Animated Video

At this year’s Annual National Conference, Sperry Van Ness International Corporation President & CEO, Kevin Maggiacomo, launched the new Sperry Van Ness Difference video. The SVN Difference Video boils down our core philosophy to it’s simplest form – it’s about going back to the basic fundamentals of supply and demand; and explains how putting the clients interests first is a benefit to everyone involved in a commercial real estate transaction.

*All Sperry Van Ness® offices are independently owned and operated.

 

Five for Friday with Linda Emery of Sperry Van Ness Commercial Advisory Group

It’s Friday! We continue our Five for Friday series with Linda Emery, Senior Investment Advisor at Sperry Van Ness Commercial Advisory Group in Sarasota, Florida.

Linda Emery
Linda Emery, Senior Investment Advisor
Sperry Van Ness Commercial Advisory Group

1. What is your geographic market and product specialty?

My geographic market is the Florida Sun Coast, specifically Sarasota and Manatee Counties, on Florida’s west coast.  I specialize in sales and leasing of office and retail properties with an emphasis on medical leasing and sales.

2. What’s your latest best practice tip that you can share?

Feel and show empathy – I’ve always listened to my clients and strived to understand their requirements, concerns and overall strategy.  Over the past few years, this has become increasingly important.  Transactions for businesses, small and large, are more complicated and require more intense due diligence and vetting.  This is the most important service I can provide my clients.

3. What’s been the biggest change over on how you run your business in the past decade?

I’ve found that teaming with colleagues on property listings has been instrumental in the growth of my business.  As in any business, volume is essential for success and, even more so when your core business is office and retail leasing.  By teaming with experienced colleagues, I enhance the services I provide my clients by tapping into the valuable knowledge of my colleagues and expanding our marketing network.  This increases the volume of listings that each of us can manage, our inventory is substantially increased, and this, in turn, provides greater income opportunities for me, my colleagues and our franchise.  A win-win no matter how you look at it.

4. What business book do you like to recommend to your colleagues?

Brokers Who Dominate – Our Managing Director gave each of us a copy of this book and assigned us chapters to present “book reports” on at our Monday morning sales meetings.  The tips and techniques shared by top brokers throughout the country made us all review our marketing and business plans.

5. What’s a fun fact that not everyone knows about you?

I love bay and inland fishing on the beautiful Gulf Coast of Florida and regularly outfish my husband and our fishing buddies.

*All Sperry Van Ness® offices are independently owned and operated.

Self storage: Q4 2012 Report and Outlook for 2013 by Nick Malagisi

Nick Malagisi
Nick Malagisi, Self Storage Council Chair

As chair of the Sperry Van Ness® Self Storage Product Council, I am pleased to provide this quarterly report on the self storage industry. This report is intended for owners, operators, vendors who service the self storage industry, investors in this particular product sector and the over 800 Sperry Van Ness advisors serving clients in 175 markets across the country.

As most of you already know, this investment product sector is a niche industry with the real estate value dependent on the operating business component. The stronger the management, the better results one should see to the bottom line. In that regard, our industry is very similar to the hospitality industry.  However, the self storage industry has not yet found a way to “flag” the facilities and create brand awareness. Its time will come.

This past year has seen a continued and  healthy improvement in the sector, led by the four public REIT’s that have had seven consecutive quarters of increased occupancies and revenue after nine consecutive quarters of losses beginning in 4Q 2008.  Public Storage remains the industry leader in  number of facilities across the country including its European division bought from the absorption of Shurgard operations some six years ago. Public Storage is also the leader in stock price at a high value this year at $130 price per share or three times the value of the next competitor, Extra Space. Public Storage stock was included in the S&P 500 and Dow Jones Industrial Average a few years ago, replacing such household names as Sears & Roebuck.  The 3Q earnings reports have just been announced and all four of the self storage REIT’s continue to perform well.

New development of the product has been at a virtual standstill these past four years, which has helped supply catch up with demand in most markets as the industry doubled in size from one billion to two billion square feet from 1995 through 2006.  The dearth of new construction has created an opportunity for the larger operators to gain market share by having the capital to purchase existing facilities, especially in the top tier markets.

Cap Rates in the top tier markets are in the 6.5-7.5% range while the rest of the country is seeing 7.5-9.0% Cap Rates. The coming year should be very interesting as those facilities that were financed with 10 year debt in 2003 will be coming to the market for either refinance or sale.  It remains to be seen how many of those properties have retained their value and will qualify for refinancing without a recapitalization.

The Sperry Van Ness organization has self storage specialists located across the country who can become a valued resource for you.  If you are interested in the investment opportunities in this area, reach out to the SVN advisor in your market and watch for opportunities to buy and sell as they become available.

Nick Magilisi,  Self Storage Council Chair, Sperry Van Ness/Commercial Realty

 

*All Sperry Van Ness® offices are independently owned and operated.

 

 

Five for Friday with Ryan Imbrie, Sperry Van Ness Imbrie Realty LLC

Every Friday here on the Sperry Van Ness® blog, we’ll be spotlighting one of our commercial real estate advisors who is game to answer our Five for Friday questions. 

We start off with Ryan Imbrie, from Sperry Van Ness/Imbrie Realty, LLC  in Portland Oregon.

Ryan Imbrie, Sperry Van Ness Imbrie Realty LLC
Ryan Imbrie, Sperry Van Ness Imbrie Realty LLC

1. What is your geographic market and product specialty?

I am based in Portland, Oregon and focus on retail investment sales in Oregon and Southwest Washington.

2. What’s your latest best practice tip that you can share?

Although it is common sense, the best practice that has been fruitful for me in the past year is re-engaging with past clients.  I have been reaching out to clients I have represented in buying or selling property in the past and asking what I should be working on for them.  This practice has led to several new listings as well as uncovering quite a few buyer needs.

3. What’s been the biggest change over on how you run your business in the past decade?

I don’t quite have a decade in the business (only 8 ½ years) but the biggest change has been building a strong team in the office.  When I started my career in 2004, I took the one-man-team approach.  Now, sellers want to hire a team of agents rather than one individual.

4. What business book do you like to recommend to your colleagues?

A book I just read has helped me re-focus on my goals in business and life: Train Your Brain for Success by Roger Seip

5. What’s a fun fact that not everyone knows about you?

In my free time (not that I have much with three daughters – ages 7, 5 and 1) I am an avid woodworker.  Some of the projects I have completed are a sleigh bed, bedside table, dresser, buffet table, hope chest, bookcase, picture frames as well as several jewelry boxes.

*All Sperry Van Ness® offices are independently owned and operated.

Commercial Real Estate Office Properties Q4 2012 and Beyond

John McDermott Sperry Van Ness
John McDermott, Office Product Council Chair, Capital Partners | SVN

Going forward, there are a lot of reasons to be excited about the commercial real estate brokerage opportunities in the office property arena. Of the leading property types, office property by its very nature requires those dedicated to the product to be true advisors to their clients. Whether pursuing landlord representation or tenant representation on the leasing side or traditional investment brokerage of the asset class; the extreme “added value” role has never been more critical to the process and valuable to the client.

The Sperry Van Ness® difference and our competitive advantage in smaller secondary and tertiary markets as well as our suburban footprint coincide perfectly with the shift of investor interest to those markets and sub-markets for office properties; both for tenancy (less commuting with $4 and $5 gas prices) and investments (suburban office sales volume YTD 2012 are up 29%). Improving financing options, low interest rates and the on-going hunt for trophy assets outside the CBD continue to be fueling the office marketplace. The sale prices for office product in tertiary markets saw a 30% surge so far in 2012 and are likely to remain strong in 2013 and beyond.

On the brokerage side, it comes back to the most fundamental realities of our business and that is clients only become active when they either have a problem or see an opportunity. Office is a product that has both in a very big way.

Understanding these factors, identifying them and acting upon them will provide significant earning opportunities for you at SVN, particularly in the next two to five years.

Problems in this market include:

  • Vacancy
  • Shifting demographics
  • Lingering rent rollover risk
  • Weak health and financial well-being of many tenants
  • Lack of demand for traditional space
  • Lack of funds for tenant improvements and leasing commissions to fill vacancy

Additionally there may be a lack of reserves to stay competitive and improve a property to increase tenant retention; too often a capital stack on the property that is either burdensome or unable to be refinanced without a significant cash infusion; and the competition of bank owned or distressed product in the marketplace.

Opportunities in this market include:

  • Lack of any significant construction in more than three years
  • Suburban and main street office investments in secondary and tertiary markets are offering 120 bp to a full 200 bp return advantage over the major or gateway markets
  • Price per foot acquisitions are well below replacement cost without the costly lead time of construction and absorption

Additionally, many investments offer vacancy upside where the investor can be the “low cost provider” in a region or sub-market and capture more than their fair share of tenants who are looking and tenants who perceive they are getting a bargain, are taking space “as is” or with minimal improvements, often at their own expense in exchange for a small rent abatement or deferral.

In the end, the advisor who is aware of these problems and opportunities will be able to get “in the middle of deals” in 2013 and beyond. Whether helping clients to reposition their existing assets, add value to a newly acquired asset or dispose of an existing asset; commissions, property management fees and asset management fees will be earned. Pay special attention to medical office space, open and first generation space and in fill spaces, particularly the smaller spaces.

– John P. McDermott, Product Council Chair | Office Properties, November 2012

 

*All Sperry Van Ness® offices are independently owned and operated.

 

Finishing Well by Kevin Maggiacomo

5

The following are excerpts from a note I sent to the SVN Advisor base this morning. I thought that others may find some of the content useful, and I am posting herein as a result. Enjoy.

5

SVN Advisors and Staff:

5

While having the courage to start something is an admirable quality, having the tenacity, the dogged determination, and the sheer will to finish well is a quality possessed by all true champions. Let’s cut to the chase – entering the race is easy, fast starts are a dime a dozen, but finishing victorious as a champion is what everyone strives for but few achieve. My question is this: where will you be at the finish line in 2012?

5

The interesting thing about a year in time is we all have the exact same opportunity – 365 days. If you break down the 365 days, you’ll see you also have the same 24 hours, 1,440 minutes, and 86,400 seconds in a day your peers and competitors have. The question you need to answer for yourself is this: are you satisfied with what you’ve accomplished this year?

5

The realization I’d ask you to consider is a simple one: While summer is over, the year is not – you still have more than 90 days to compete and win business. So, will you finish well, or just stand on the sidelines and cede opportunity to your competitors? One of the greatest myths in the commercial real estate business is if a deal isn’t scheduled to close this year by now, it simply can’t happen. Let me say this as clearly as I can – THIS IS A NOT TRUE. Based on my having observed 12 years of pipeline activity at SVN, I can guarantee you between now and the end of the year all of the following things can occur:

5

1. Some of the deals you hope to close by year-end won’t. You can either mourn the inevitable, or work hard to ensure there’s enough volume in your pipeline to more than offset any year-end slippage that occurs.

5

2. Not all deals that die remain dead. Transactions previously considered dead opportunities can have life breathed back into them, but only by those Advisors who remain engaged.

5

3. New opportunities will go full lifecycle from list to close by 12/31/2012. You can either find and win this new business, or let one of your competitors do so.

5

Stay engaged, don’t quit, and keep working. Those who stay focused on items #2 and #3 above won’t need to spend time mourning losses covered under point #1 above.

5

A trusted advisor of mine has always told me great companies beat their competition to the future, because their leaders understand how to pull the future forward. I would encourage you to build a 90-day plan in which you both beat your competition to the future (go win new deals), and in which you pull the future forward (pull deals from Q1 ’13 into Q4 ’12). To that end, I offer the following suggestions to help power your plan:

5

The most successful Advisors help clients reach their goals by using their experience, knowledge, and work ethic to close transactions, not explain why they can’t close them. New listings will be acquired, and transactions will be closed before year’s end – will your deals be among them?

5

With less than 30 days remaining before we enter Q4, what are you going to accomplish with the last 90+ days of the year? It’s been said that mediocrity rests while excellence remains in tireless pursuit of the objective. Will you stay the course and finish well, or will you let others win the prize? It’s your choice – choose wisely.

– Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation.

 

*All Sperry Van Ness® offices are independently owned and operated.

 

The Year Ahead – 2012 by Kevin Maggiacomo

As we look forward to a new year, I am pleased to share my thoughts on the very memorable 12 months past, and to offer my outlook for the commercial real estate market in 2012. Before I do, I would be remiss if I did not thank the Sperry Van Ness clients, Advisors, staff, and fellow brokers for their contributions in driving us forward in spite of the unpredictable times. I know that I speak for all SVN Advisors and staff when I wish you a prosperous New Year.

5

A Year of Fits and Starts for Commercial Real Estate

5

During a year of extraordinary economic and political uncertainties, commercial real estate held its position as a crucial safe haven for investors in 2011. Investment into the sector reached a peak in the second quarter, supported by CMBS conduit originators and more active life company and bank lenders. Even as economic and employment trends fell short, leasing activity for well-positioned assets strengthened. During this period, investment into segments of the market that had lagged during 2010, including commercial properties in secondary and tertiary markets and value-add opportunities, showed signs of firming, as well.

5

In spite of the rising momentum, commercial real estate investors revealed they were not entirely immune to the obstacles facing the wider recovery in business confidence. As I suggested in my New Year’s message one year ago, this has been a period of fits and starts. Over the summer, renewed disruptions of capital and credit that were largely unrelated to the property sector threw the conduit into disarray and slowed the pace of transaction activity more broadly. For many borrowers, lending sources pulled back once again, with the result that a larger share of pending sales has struggled to reach closing.

5

While sales volume in the third and fourth quarters will not match the spring’s flurry of trades, the shifts in the market must be understood in the context of a turbulent economic and political environment. Where investors have retrenched, it is often under the force of external pressures. It nonetheless remains clear from the current diversity of investors and lenders that commercial real estate is high on the investment hierarchy. In fact, many of the last twelve months’ most notable and most visible deals only came to fruition as the year drew to a close. The fundraising activities of the major REITs support this assessment, as well. US REITs raised $37.5 billion in equity in 2011, a new record that easily surpasses the previous high of $32.7 billion set in 1997. They raised another $13.8 billion in unsecured debt.

5

5

A Persistent Imbalance

5

In the final tally, investment sales in 2011 will easily surpass the $120 billion benchmark set in 2010 and will roughly triple the record lows set in 2009. As a wider range of buyers and sellers have reengaged, pricing in the most actively traded markets has exhibited the sharpest improvements. In the extreme, some highly coveted trophy properties have prompted aggressive bidding by domestic and cross-border buyers and have ultimately sold at higher prices than during the market peak in 2006 and 2007.

5

While the most visible investments affirm institutional investors’ confidence in the sector, they offer only one perspective on the market. As I pointed out at this time last year, the headline statistics do not fully convey the unevenness of the recovery or the diversity of its investors. The market for assets that do not dominate their respective cities’ skylines is necessarily recovering along its own trajectory. In the current market, that has meant a balance of tailwinds and headwinds that has weighed in favor of the latter.

5

Core investors whose scope may be limited to a subset of metropolitan areas have argued that rising prices and falling cap rates will inevitably spill over into other segments of the market. In one respect, this is correct. Yields on mid-cap investments are higher than for any trophy property. But that assessment also overlooks the uniqueness of the market for small- and mid-cap commercial properties and the very different makeup of the investor and lender base. Understanding these differences is crucial to assessments of what the next year will hold for commercial real estate.

5

The Economy, Jobs, and the Political Deadlock

5

As in previous cycles, the recovery in small- and mid-cap property investment is proving more sensitive to underlying drivers of cash flow than the market for the largest properties. This inevitably means that a strong economic recovery will be one of the requisites for more robust investment. While companies have seen their profits rebound, surpassing their previous peaks from 2007, an environment of extraordinary economic and political uncertainty has constrained decision-making and investment in new tools and people.

5

5

In the first days of 2012, the employment outlook looks brighter. For commercial real estate – and for millions of families across the country that have struggled with unemployment – this is the critical missing link to a more balanced recovery. Although the data on job creation in 2011 only shows a modest improvement over the prior year, leading indicators of firm hiring have turned more positive. Job openings have been trending up consistently over the last year. More recently, first-time applications for unemployment insurance have fallen back to their lowest levels since early 2009. Further, employment gains in temporary help services have picked-up over the past 5 months, which lends well to permanent job creation. Even though single-family housing shows no definitive signs of an inflexion, other metrics indicate that marginally stronger growth in 2012 will support a healthier pace of private sector job creation.

5

5

Regrettably, an environment of political dysfunction qualifies the outlook, both at home and in Europe. In fact, the latter presents one of the most credible threats to global growth. In the United States, the uncertainties presented by unusually intrusive policymaking may resolve over the next year, given the need for all parties to clarify their political positions and objectives as Election Day approaches. Needless to say, a business environment where the rules of the game are more predictable is more conducive to growth and job creation.

5

Investment Sales and Financing

5

As much as it depends on a stronger economic trajectory, the outlook for small- and mid-cap investment also relies on buyers’ access to financing. In financing their investments, large REITs may offer shares or issue unsecured bonds; trophy investments have also been supported by favorable lending terms from life companies and large international banks. These scenarios are not reflective of the market for smaller assets where the sources of risk and its mitigating factors can be very different. Given the historically dominant role of regional banks and CMBS lenders in facilitating this segment of the market, these lenders figure prominently in the assessment of what the next year will hold.

5

Although the CMBS market has struggled to reassert itself since last summer’s interruption, plans for new issuance in the first quarter of 2012 indicate a gradual increase in conduit origination activity. Surprising as it may seem, stability in global bond markets is an important condition for well-functioning CMBS markets, since the spreads on the latter’s bond yields are influenced by corporate bond market trends, as well. In the first half of 2011, more than half the CMBS loans securitized had origination balances of less the $10 million. It remains the case that a more active CMBS market is required for the small and mid-cap segments to flourish, in particular, as a large number of seasoned CMBS loans mature over the coming year.

5

Outside of the apartment sector, where generally improving fundamentals and the contributions of Fannie Mae and Freddie Mac are facilitating both sales and new development, commercial property investors are dependent on bank financing given an absence of other debt sources. For the last several years, that has presented a problem. Banks have been preoccupied with the management of their distress portfolios and have hesitated to extend new credit, even in the best of cases. The most recent data show those priorities changing. Banks’ default rates on their commercial and apartment loans have fallen consistently over the last year. Coinciding with the stronger performance of the legacy balance sheets, many banks are accelerating the liquidation of bad loans and real estate-owned. A growing minority are lending again, increasing their exposure in segments of the market where an absence of competition and low interest rates are affording opportunities to extend credit. Improvements in bank lending and CMBS issuance will have a disproportionately positive impact on the mid-cap market. Access to historically low-cost credit in 2012 and the likelihood of higher interest rates in 2013 signal an unmatched window of opportunity for acquisitions over the next 12 months.

5

5

Conclusions

5

The economic and jobs outlook is improving. With so many of the underpinnings of a stronger recovery in place, we can afford a degree of optimism. Politics and the possibility of external shocks, primarily from Europe, still qualify that optimism.

5

While prices in the largest markets have recaptured a significant share of their lost value, other assets have lagged the headline measures. Combined with historically low borrowing costs, there is tremendous upside potential for borrowers with access to financing who can identify well-positioned assets.

5

While the process has been frustratingly slow, more banks are moving distress off their balance sheets. This process has the potential to accelerate in 2012, given banks’ stronger positions generally, an evolving regulatory environment, and the potential for distress from maturing CMBS. That will create some pressures on the market, but it should also deepen the pool of distressed assets and notes for sale.

5

Attention will necessarily turn to the small and mid-cap market as the economy improves and financing options broaden. Given our experience in this arena, we are anticipating a high volume of advisory work to identify and market investment opportunities before consensus firms. Timing will be the crucial differentiator in this market – the intersection of low-cost financing and first-mover advantage demands that we act deliberately.

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

The Radicalization of the Norm by Kevin Maggiacomo

With less than 100 days remaining in 2011, I want to pose the following question: “What will YOU do differently in 2012?” You cannot simply repeat your 2011 performance in 2012 and expect the outcome to be any different. My message is a rather simple, yet important one – the market doesn’t matter, but YOUR actions do! Accepting the norm accomplishes little more than sentencing yourself to mediocrity, while radicalizing the norm creates opportunity even when markets don’t seem to be sympathetic to your cause.

5

While commercial real estate markets are certainly not static, I’m always surprised at the numbers of people who operate as if they were. As the landscape around them changes, rather than understanding and adapting to new market drivers, many just prefer to pretend as if it’s business as usual. However, it is those who adapt to the fluidity of the market who become innovative market leaders, and who thrive during even the toughest of market conditions. Likewise, it is those who refuse to change with the times that push themselves into irrelevancy, and eventually become self-inflicted casualties of the weeding-out process.

5

What is not so obvious is that during times of adversity come the greatest opportunities. Those who thrived during the past few years understood this principle, and as a result, they will likely be the ones who lead the way in 2012 as well. Successful companies adapt their business models, re-engineer their business practices, and implement new strategies and tactics while their peers sit on the sidelines wondering what went wrong.

5

Rather than talking about constricted capital markets, successful companies seek out the investors and lenders still doing deals, and restructure transactions to fit the changing guidelines of active capital partners. Rather than complain about transaction bottlenecks, the smart players work with institutions and special assets groups to work around and through the logjams. Rather than work with brokers replete with excuses about why they’re not successful, they find brokers who focus on outcomes and not excuses. They key to success in down markets is to participate in the present while looking toward the future, but refusing to allow yourself to live in the past.

5

So some chest pounding now – not to advertise, but because I think it’s relevant:

5

At Sperry Van Ness we’ve led the charge to radicalize the brokerage industry. Since our inception we’ve done business differently than other brokerage firms. From pioneering an open-source brokerage model, to being the first brokerage firm to mandate 100% social media adoption, to being the first to have an in-house auction firm, to being the first to adopt a cloud-based business platform, we have focused on doing business based upon where the market is headed, not where it’s been.

5

At Sperry Van Ness, we realized several years ago that traditional business models could not service non-traditional markets. When our competitors were cutting back as they adopted the bunker mentality of watch and wait, we were growing, and we did it based on a debt-free, profitable business model. It was clear to us that we needed to continue to adapt to the needs of our clients, and that together, we would not only survive the challenges of changing markets, but we would thrive amidst them.

5

My encouragement to you as we enter 2012 is to refuse to buy into the negative rhetoric. Don’t settle for working with advisors who offer excuses, engage professionals whose work demonstrates they value your relationship as much as they say they do. Don’t tolerate brokers who embrace the status quo, but look for those who shatter it. Look for business partners rather than vendors. Find those firms willing to serve you, regardless of whether a commission exists or not. Look for those willing to embrace change, those who innovate, and those who radicalize the norm.

5

If you haven’t experienced working with a brokerage firm that embodies the ethos I’ve described above, then I invite you to contact us and experience the Sperry Van Ness difference for yourself.

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

Technology Enabled Collaboration by Kevin Maggiacomo

The impact and the power associated with mobilizing people for a purpose are rooted in fundamental economics – they are nothing new. From electing a government official, to spreading word of and organizing an “Aquarian exhibition” of 500,000 people at Woodstock in 1969, ideating among a critical mass of people, sharing and sourcing information while leveraging the power of numbers and virality have always been present in society. Aligned crowds, we call them “smart mobs” today, are driving virtually every major trend in the global economy.

What’s new, and ever evolving, is the technology which is enabling crowds to be catalyzed, assimilated, and leveraged like never before. If we examine only the past five years, we see how rapidly the speed and power of group collaboration has increased to create value to stakeholders in ways that were previously thought unimaginable. “Technology enabled collaboration,” as its been dubbed, is in full force and effect in almost every industry on the planet. From Restaurants to Travel, and from Yelp to Orbitz, people and businesses are organizing, collaborating, sharing and peering for the purposes of lowering costs, improving quality, saving time, and even curing disease.

Another fundamental shift that has taken place over the last decade is the move from proprietary to transparent, from closed architecture to open source, from a world controlled by scarcity to one opened up by sharing. The power in business is no longer generated by those who control something, but by those who share it. I recall a friend of mine saying: “business has never been about addition or subtraction – it has always been about multiplication.” No greater multiplier exists than creating an impassioned, intentional movement based upon meeting a market driven need.

The following statement may seem counter-intuitive to many still clinging to their old-school ways, but businesses today need to understand they probably cannot control the marketplace by the uniqueness of a product or service, therefore their only choice is to empower the marketplace by adding value. Sage advice then, would be to not get sucked into the frivolity of attempting to control a market – be disruptive by opening it up.

Sustainability for businesses will be found in how quickly businesses can embrace sharing, not how long they can hold a market hostage. Few people will argue with the fact that business has, and will always be, about relationships. We can debate positional variances between qualitative, quantitative, and relational impact, but the market has ended one debate – you don’t control relationships you empower them.

Despite this movement, and hitting a bit closer to home, the commercial real estate industry seems to have been immune to the collaborative trend, and continues to operate much in the same way as it has for 20-30 years. When my firm (Sperry Van Ness) broke from the industry standard approach more than 25 years ago by adopting a set of core covenants, which gave birth to our ethos of compensated cooperation and participation with the entire brokerage community to market our inventory, we were looked at as heretics among our peers. I’m certain as time has evolved our “heretical” approach is now seen as having set the chinning bar for how the industry should operate.

The problem is that while the marketplace recognizes the benefit of the aforementioned model, the brokerage industry as a whole continues to operate with much of the same opacity, often times at the expense of the client and to the benefit of the brokerages. “Quietly” marketing properties, offering zero fee incentive for other brokers to help sell a listing, inserting eyeball roadblocks like overused registration and confidentiality requirements are still par for the course. Has any other industry been more immune to the advancements of technology enabled collaboration than commercial real estate?

When will our industry as a whole to come out of the shadows, cease with the ethereal and mercurial, embrace fundamental economic concepts like supply and demand and operate in the light of day? In the future, the market will simply not tolerate anything less than an authentic and transparent approach to business.

What say you?

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.

 

Freemium by Kevin Maggiacomo

How do you feel when you get something for free? Does the hair stand up on the back of your neck as if you’re being set-up for a bait-and-switch, or do you feel like you’ve received something of value at no cost for which you’re appreciative? If you’re anything like me, I’ve experienced both of the aforementioned scenarios. In my opinion there is definitely a right and a wrong approach to “Free.” In today’s post I’ll examine “Freemium” offers and how they might play a part in redefining the commercial real estate industry.

5

The reality is that nowadays most of us are accustomed to receiving certain services (information and data) free of charge, and on the surface, with no strings attached and for nothing in return. Not a marketing gimmick like “Buy two get one free” (which is often the same as marking down a 2x marked-up product by 50% if you buy two), or the classic ad supported online newspaper and content model, but an increasingly important economic model whose genuinely free offerings are changing the ways in which consumers use (and purchase) products and services.

5

Coined “Freemium,” by venture capitalist Fred Wilson (@FredWilson), the word is a portmanteau, which combines the words “Free,” and “Premium,” to describe a business model which follows one basic principle: Give a core product away for free to a critical mass of consumers, and sell a small percentage of them a premium product.

5

Not Gillette, which practically gives their blades away for free, charging through the nose for their razors, or cell phone companies “giving” away the phone and charging for a data plan and two year commitment, but something, which, according to Peter Froberg (@PeterFroberg), a growth consultant with whom I work, “can be used in and of itself, without necessarily buying something else.” He likens the model to the fruit stand operator who offers free, sweet, sliced apples to entice his customers not to buy apples, “that’s fake free,” he says, but to buy pears instead.

5

For most, the Freemium model best resonates when discussing Skype. To date, Sykpe’s free VoIP product has provided more than 1B downloads, and provided more than 16B call minutes of “Skype-to-Skype” calls. During that same time period, “Skype-Out” call minutes, Skype’s premium product, has accounted for only 2.2B of those minutes. A low percentage, of paying users, indeed, but enough to generate $21M in operating profit in 2010 (a big swing from their $352M growth related loss of 2009). Other emerging Freemium companies which feature ten’s of thousand’s of users include Evernote, Boardsuite, Linkedin, Pandora, Google (not exactly an “emerging” company), and more.

5

Closer to my (industry) home, we find that LoopNet has been operating with a Freemium model for years – Free to post, free to search but with a paywall over Premium Search (access to newly listed properties), and Premium Lister access, which features more prominent portal placement and access to leads. Like them or not, the Freemium model has served them well…they are a profitable, $750M company recently acquired by CoStar.

5

Hundreds of businesses, most of which are in technology or in the Web 2.0 space are utilizing Freemium models to generate profits – giving something away for free, and charging for another, often completely different product in the process. And in the course of my researching the Freemium space, it occurred to me that commercial and residential real estate brokers alike have for years been operating with a Freemium model.

5

Peruse any national brokerage’s website, and you will find an abundance of free, well written subject matter, like market overview’s, reason’s to buy, reason’s to sell, and so on (at SVN, we just released our annual “Top Market’s To Watch” report). For some of the same reason’s I’m blogging, which include strengthening my personal brand, establishing credibility by demonstrating my ability to think critically, these companies work to create valuable content and strengthen their brands in the hopes that the reader will buy something else – their premium products.

5

However, just as Freemium is emerging as a legitimate business model supported by empirical data, I’m hearing more about the brokerage best practice of charging for everything one does – no more free advice, abstracts, surveys and reports. So for those of us who are CRE practitioners, I ask you – Is the aforementioned “best practice” yet another example of the brokerage industry operating in the stone ages…a little slow on the uptake, or does the Freemium concept represent what leadership and strategy advisor Mike Myatt (@MikeMyatt) refers to as a “next practice” capable of creating a disruptive change in an industry prone to herd mentality? While I believe there to be truth in the old saying “free is a very good price,” I’d be interested your opinions – please do share.

Kevin Maggiacomo, CEO & President, Sperry Van Ness International Corporation

 

*All Sperry Van Ness® offices are independently owned and operated.